Markets Overview
- ASX SPI 200 futures little changed at 7,273.00
- Dow Average little changed at 34,746.25
- Aussie little changed at 0.7308 per US$
- U.S. 10-year yield rose 4.0bps to 1.6118%
- Australia 3-year bond yield rose 5bps to 0.47%
- Australia 10-year bond yield rose 5bps to 1.64%
- Gold spot little changed at $1,757.13
- Brent futures up 0.5% to $82.39/bbl
Economic Events
Many central banks are starting to withdraw the emergency stimulus they introduced to fend off last year’s pandemic recession.
With inflation accelerating, the Federal Reserve is set to slow its asset-purchase program, while peers in Norway, Brazil, Mexico, South Korea and New Zealand are among those to have already raised interest rates. Behind the shift are signs that the recent inflation scare won’t fade soon amid supply chain strains, surging commodity prices, post-lockdown demand, ongoing stimulus and labor shortages.
Complicating the task for policy makers is that growth may be slowing, prompting some to warn of a stagflationary-lite environment.
That puts central bankers in a bind as they debate which risk they should prioritize. Targeting inflation with tighter monetary policy adds to the pressure on economies, but trying to boost demand may ignite prices further.
For now, the feeling of many is that inflation has lingered longer than most predicted. As Huw Pill, the Bank of England’s new chief economist, said last week, the “balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long-lasting than originally anticipated.” Not all are as concerned or looking to change tack. Officials at the European Central Bank and Bank of Japan are among those intending to keep stimulating their economies aggressively. And the International Monetary Fund predicts that in advanced economies at least, inflation will soon ease to about 2%.
Other News
TikTok on Wednesday denied there was a challenge trending on its platform daring students to slap their teachers but said it would remove such content if it appeared. Earlier this week, Connecticut Attorney General William Tong called on TikTok Chief Executive Shou Zi Chew to meet parents and teachers in the state over “dangerous content” being spread on the social media platform, saying that a new “slap a teacher” challenge going viral on the app was endangering educators.
